The CLAIM Act and the Cannabis Insurance Market: What a Federal Safe Harbor Would, and Would Not, Change
On September 16, 2026, Representatives Nydia Velázquez of New York and Warren Davidson of Ohio introduced the Clarifying Law Around Insurance of Marijuana Act, known as the CLAIM Act, in the House of Representatives (Rodriguez 2026). A Senate companion had been filed in July by Senators Kevin Cramer of North Dakota and Ruben Gallego of Arizona (Rodriguez 2026). The bill is not new. Versions of the CLAIM Act have circulated since 2019 and have twice cleared the House only to expire in the Senate (Insurica 2023). What is new is the environment into which the 2026 bill arrives: a cannabis insurance market that remains structurally dependent on nonadmitted paper, a rescheduling process that has moved medical cannabis to Schedule III while leaving adult use cannabis on Schedule I, and a trade association coalition that has, for the first time, lined up nine national bodies behind the measure (MJBizDaily 2026; Rodriguez 2026). This essay examines what the CLAIM Act would actually do, why the cannabis insurance market looks the way it does, and why the surety and fidelity segment of that market deserves separate analysis from the property and casualty lines that dominate the public discussion.
The mechanics of the safe harbor
The CLAIM Act is a safe harbor statute, not a mandate. Its operative provisions would bar federal agencies from prohibiting, penalizing, or discouraging an insurer from writing a “cannabis related legitimate business,” meaning an enterprise operating lawfully under state, local, or tribal law, solely because of that business’s cannabis activity (Rodriguez 2026). Federal regulators would likewise be barred from pressuring a carrier to cancel, downgrade, or limit coverage on that basis, and insurers, agents, and brokers would be shielded from federal criminal prosecution and civil liability arising solely from serving such a business (Cannabis Business Times 2026). Representative Velázquez framed the stakes in terms familiar to any small business owner: a single fire or storm can erase everything an operator has built, and the state and federal conflict leaves thousands of licensed businesses without a safety net (Rodriguez 2026).
Three features of the design matter for practitioners. First, the bill does not touch the Controlled Substances Act. Cannabis would remain a controlled substance, and the underlying legal exposures of a licensee would be unchanged. Second, the bill does not require any carrier to write the class. Underwriting appetite, pricing, and capacity would continue to be governed by loss experience and risk control, exactly as they are today (Rodriguez 2026). Third, the protection is keyed to federal consequences only. State insurance regulation, including admitted rate and form filing, surplus lines eligibility, and licensing, is untouched.
The last point is the crux. The reason cannabis insurance is overwhelmingly a nonadmitted product is not that state regulators forbid admitted carriers from writing it. It is that admitted carriers, and more importantly their boards, reinsurers, and outside counsel, have concluded that the federal exposure is not worth a relatively small premium pool. The CLAIM Act is an attempt to change that calculus at the board level.
Why the market is built on surplus lines paper
The National Association of Insurance Commissioners reports that most commercial insurance for cannabis related businesses is still placed in the nonadmitted market, with coverage gaps concentrated among smaller operators, ancillary service providers, infused product manufacturers, and social consumption lounges (NAIC 2026). Limits are a second constraint. The NAIC observes that carriers commonly offer $1mn per occurrence and $2mn aggregate on general liability, property, and product liability, while larger multistate operators may require $5mn to $10mn or more (NAIC 2026). Surplus lines placements also carry a cost premium over admitted paper, a fact the cannabis trade press has long noted in comparing the insurance problem to the parallel banking problem (MJBizDaily 2026).
The federal origins of this structure are well documented. The Department of Justice’s 2013 enforcement guidance, commonly called the Cole Memorandum, directed federal prosecutors to deprioritize enforcement against state-compliant cannabis activity absent specified federal interests (Cole 2013). That guidance was rescinded in January 2018 (Sessions 2018). Financial services firms have since operated under the Financial Crimes Enforcement Network’s 2014 guidance on suspicious activity reporting for marijuana related businesses, which tolerates rather than authorizes the relationship (FinCEN 2014). An insurer that pays a property claim to a cultivator, or a surety that indemnifies a state for a dispensary’s unpaid excise tax, is arguably handling proceeds of a federally unlawful enterprise. That theoretical exposure, however remote as a matter of prosecutorial practice, is what keeps admitted capacity on the sidelines.
Rescheduling has complicated rather than resolved the picture. The Department of Justice moved medical cannabis to Schedule III in April 2026 following a December 2025 executive order, but adult use cannabis remains on Schedule I, and most licensed operators are adult use businesses (MJBizDaily 2026; NAIC 2026). Schedule III status eases the tax burden of Internal Revenue Code § 280E for the medical channel, but it does not legalize the conduct, and it does nothing for the recreational majority of the market. A cannabis insurance program built for the whole industry therefore still faces the same federal question the CLAIM Act is designed to answer.
The surety dimension, which the coverage debate overlooks
Public discussion of the CLAIM Act, including the Insurance Business coverage that prompted this essay, centers on property, general liability, and product liability. Surety is rarely mentioned, yet the surety relationship with the cannabis industry is in some respects more direct than the insurance relationship, because it is compelled by the licensing statutes themselves.
Nearly every state that licenses cannabis or hemp activity conditions the license on a surety bond, whether a cannabis license bond guaranteeing payment of excise taxes and compliance with regulations, a hemp processor or commodity handler bond guaranteeing payment to growers, or a dispensary bond securing the state’s costs of closure and disposal. Colorado, for example, treats hemp operators as commodity handlers and requires a surety bond of them on that basis. The obligee is the state itself. The principal is the licensee. The surety, a corporate insurer regulated under the same state insurance code as any property carrier, promises the state that the licensee will pay its taxes and follow its rules.
This creates an interesting asymmetry. The state, acting through its own regulatory agency, demands that a federally regulated financial institution guarantee the tax obligations of a federally unlawful enterprise. The state’s own conduct is the strongest available evidence that the bond is a “cannabis related legitimate business” transaction in the sense the CLAIM Act contemplates. Whether the bill’s definition of “insurer” and “insurance” reaches surety is a drafting question worth watching as the bill moves through committee. Surety is classified as a line of insurance in every state insurance code, and surety companies are licensed and regulated as insurers, so the natural reading includes them. Prudent counsel for the surety trade would nevertheless prefer an express reference.
The practical consequence for cannabis operators is that surety capacity, like insurance capacity, has been concentrated among a small number of specialty underwriters willing to accept the federal ambiguity. Surety is also a credit product rather than a pooled risk product. The surety expects to be reimbursed by the principal for any loss, which means the underwriting is fundamentally an assessment of the licensee’s financial condition, ownership, and character, not a rate applied to an exposure base. That is why a cannabis license bond application asks for the personal financial information of each owner: the surety is extending credit to the people behind the license.
Surety One, Inc. has underwritten cannabis license bonds, hemp bonds, and fidelity bonds for licensed operators for more than a decade, in every state that requires them, through its dedicated program at CannabisSuretyBonds.com. The program was founded by a credentialed cannabis insurance specialist and offers state by state guidance on marijuana license bond and hemp bond requirements, along with the Surety One publication The Cannabis Operator’s Guide to Surety & Fidelity Bonds. Operators who cannot find a surety willing to look at a cannabis or marijuana account will find one there.
What the CLAIM Act would change, and what it would not
If enacted, the CLAIM Act would remove the federal legal risk that currently sits at the top of every admitted carrier’s decision tree. That is a necessary condition for broader participation, and the endorsement of the American Property Casualty Insurance Association, the Council of Insurance Agents & Brokers, the Independent Insurance Agents & Brokers of America, the National Association of Mutual Insurance Companies, the Wholesale & Specialty Insurance Association, and four other national trade groups suggests the industry believes it is a meaningful one (Rodriguez 2026). The coalition’s joint statement argues that resolving the state and federal conflict would let the industry serve cannabis businesses and the ordinary commercial and personal lines customers connected to them while remaining in compliance with the law (MJBizDaily 2026).
It is not a sufficient condition. The underlying exposures of cultivation, extraction, manufacturing, and retail, including fire, theft, crop loss, employee injury, and product liability, would remain what they are, and they would continue to shape appetite, pricing, and limits (Rodriguez 2026). Admitted carriers entering the class would need filed forms and rates, which takes time and state-by-state effort. Reinsurers, many of them domiciled outside the United States and subject to their own home country restrictions, would need to reach their own conclusions. And in the surety segment, the credit underwriting that governs whether a particular licensee qualifies for a bond would be entirely unaffected by any change in federal law.
For the moment, the placement landscape is unchanged. Prior versions of the CLAIM Act have failed to become law, and the 2026 House bill is at the earliest legislative stage (Rodriguez 2026). The prudent course for a cannabis operator is to treat the bill as a signal of direction rather than a promise of capacity: update loss runs, document risk controls, review lender and landlord insurance requirements, and secure the surety bonds the state licensing regime already demands from an underwriter who is in the market today. Follow our blog for surety news, case law updates and related commentary for surety professionals.
~ C. Constantin Poindexter, MA, JD, CPCU, AFSB, ASLI, ARe, AINS, AIS, CPLP
References
- Cannabis Business Times. 2026. “US Lawmakers Introduce Bill to Assist Cannabis Businesses in Getting Insurance.” September. https://www.cannabisbusinesstimes.com/business-issues-benchmarks/cannabis-business-insurance/news/15835145/us-lawmakers-introduce-bill-to-assist-cannabis-businesses-in-getting-insurance
- Cole, James M. 2013. “Guidance Regarding Marijuana Enforcement.” Memorandum for All United States Attorneys. U.S. Department of Justice, August 29.
- Financial Crimes Enforcement Network. 2014. “BSA Expectations Regarding Marijuana Related Businesses.” FIN 2014 G001. U.S. Department of the Treasury, February 14.
- Insurica. 2023. “Cannabis State of the Market.” June. https://insurica.com/blog/cannabis-state-of-the-market/
- MJBizDaily. 2026. “Mainstream Insurance Companies Push for Cannabis Industry Access.” September 23. https://mjbizdaily.com/news/mainstream-insurance-companies-push-for-cannabis-industry-access/618237
- National Association of Insurance Commissioners. 2026. “Cannabis and Insurance.” Insurance Topics. https://content.naic.org/insurance-topics/cannabis-and-insurance
- Rodriguez, Mav. 2026. “Cannabis Insurance Bill Could Widen Carrier Options in E&S Heavy Market.” Insurance Business, September 23. https://www.insurancebusinessmag.com/us/news/breaking-news/cannabis-insurance-bill-could-widen-carrier-options-in-eandsheavy-market-590890.aspx
- Sessions, Jefferson B. 2018. “Marijuana Enforcement.” Memorandum for All United States Attorneys. U.S. Department of Justice, January 4.
- Surety One, Inc. The Cannabis Operator’s Guide to Surety & Fidelity Bonds. https://cannabissuretybonds.com/